‘Hot money’ surges for 4th month
Foreign investments in local stocks and bonds in July surged for the fourth consecutive month as global financial markets stabilized, prompting fund managers to make more rational bets.
Data released by the Bangko Sentral ng Pilipinas (BSP) on Thursday showed investors continued to see the Philippines as a safe destination for their funds.
Transactions in July 2014 for registered foreign portfolio investments yielded overall net inflows of $321 million, reflecting a significant improvement from the previous month’s $44 million.
Foreign portfolio investments are placements in stocks, bonds and deposit certificates. These are also referred to as “hot money” due to the speed at which they can come in or be pulled out of a particular market.
Registered investments for the month slightly rose by 4.4 percent to $1.7 billion, while outflows declined by 12.6 percent to $1.4 billion.
Bulk of foreign investments went to government securities, reaching $213 billion, while the rest came in the form of $137 million.
The United States, the United Kingdom, Singapore, Malaysia and Germany were the top five investor countries for the month, with combined share to total of 80.8 percent. The US continued to be the main destination of outflows, receiving 83.6 percent of total.
The country has yet to fully recover from the “temper tantrum” early this year, which resulted in record net outflows in foreign investments. For the first seven months of the year, the country still had a net outflow of $1.1 billion.
Higher investments in past months coincided with the BSP’s recent moves to tighten monetary settings and mop up liquidity from the system.
